Foreign award enforcement limits clarified: Indian courts will not reopen jurisdictional objections decided under the foreign seat's law.

A foreign award made in London under English law could not be challenged in India under section 34 of the Arbitration and Conciliation Act, 1996, because the proper objections to the declaratory award on jurisdiction and tribunal constitution had to be taken under the foreign arbitral law and within its prescribed time. Having failed to do so, the parties could not reopen those issues in India. On enforcement, the court applied the narrow foreign-award public policy standard and held that alleged FEMA non-compliance, without more, did not justify refusal under sections 46 to 48. The award was therefore enforceable in India.

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Issues: (i) Whether a petition under section 34 of the Arbitration and Conciliation Act, 1996 was maintainable to challenge a foreign award where the arbitration was seated in London and governed by English law. (ii) Whether the foreign award was liable to enforcement under sections 46 to 48 of the Arbitration and Conciliation Act, 1996, including whether the award could be refused on the grounds of absence of arbitration agreement, improper constitution of the tribunal, or alleged violation of FEMA and public policy.

Issue (i): Whether a petition under section 34 of the Arbitration and Conciliation Act, 1996 was maintainable to challenge a foreign award where the arbitration was seated in London and governed by English law.

Analysis: The parties had agreed that the charter party and guarantee were governed by English law and that the seat of arbitration was London. The tribunal had already rendered a declaratory award deciding the existence of the arbitration agreement and the constitution of the tribunal. Under the English Arbitration Act, 1996, remedies against a jurisdictional or declaratory award were available under the statutory challenge provisions, and the party concerned had to pursue those remedies within the prescribed time. Having failed to challenge the declaratory award in the proper foreign forum, the petitioners lost the right to re-agitate the same objections in India. The Court also held that the earlier section 9 proceedings did not confer a right to invoke section 34 in respect of a foreign award.

Conclusion: The section 34 petition was not maintainable and failed.

Issue (ii): Whether the foreign award was liable to enforcement under sections 46 to 48 of the Arbitration and Conciliation Act, 1996, including whether the award could be refused on the grounds of absence of arbitration agreement, improper constitution of the tribunal, or alleged violation of FEMA and public policy.

Analysis: The Court held that the arbitration clause in the charter party, read with the guarantee and rider, stood incorporated in the contract relied upon by the petitioners. The challenge to the tribunal's constitution and jurisdiction was barred because the declaratory award on those points had attained finality under the applicable English law. On enforcement, the Court applied the narrow Renusagar and Shri Lal Mahal standard: a foreign award may be refused only if enforcement would be contrary to the fundamental policy of Indian law, the interests of India, or justice or morality. A mere alleged contravention of FEMA regulations, even if assumed, did not by itself render the transaction void or bring the award within the public policy exception. The Court further held that no ground under section 48 was made out to resist enforcement.

Conclusion: The foreign award was enforceable and the objection to enforcement was rejected.

Final Conclusion: The challenge to the foreign award could not be pursued in India under section 34, while the award was entitled to enforcement in India under Part II of the Arbitration and Conciliation Act, 1996.

Ratio Decidendi: Where the arbitration is seated abroad and governed by foreign law, the proper challenge to a jurisdictional or declaratory award must be taken under the foreign arbitral law, and a party that does not do so cannot reopen the same objections in India; enforcement of a foreign award may be refused only on the narrow grounds recognised for foreign awards, and a mere breach of domestic regulatory law does not, without more, establish violation of Indian public policy.

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